The widening income gap is not due to insufficient liquidity.

On the contrary, it is the increase of liquidity that leads to the widening income gap in China. If there is no increase in mobility since the reform and opening up, everyone sticks to their land and all the opportunities to get rich cannot be used, then China will still be a poor country.

Now many scholars believe that unfair distribution is caused by insufficient liquidity, and many scholars believe that it is caused by unfair starting point.

Lack of liquidity includes obstacles to mobility caused by monopoly, obstacles to the formation of regional protection and obstacles to identity restriction. In my opinion, it is fundamentally flawed to explain the income gap with insufficient liquidity. Whether our society lacks mobility is a difficult question to answer. What standard is enough or enough? Most people who participate in the discussion use a standard in their own mind as a standard, rather than an objective measure. On the one hand, we can cite many examples of insufficient liquidity, but ignore the fact that liquidity is constantly improving.

It should be admitted that since the reform and opening up, people's economic freedom has been increasing. We only see the obstacles and ignore the improvement. From a historical point of view. The past 28 years have witnessed unprecedented economic activity in China. To tell the truth, there are tens of millions of rich people in China today, and they were all poor 28 years ago. Because during the Cultural Revolution, all the rich people in the country were wiped out, their property was confiscated and even their homes were copied. No one owns a private car or a private house. The total amount of bank savings deposits in China is only 2 1 100 million yuan, which is less than that of 25 yuan per capita. China was really a poor country at that time. However, there are tens of millions (perhaps hundreds of millions) of rich people today, and the per capita savings account has reached tens of thousands. Isn't this proof of sufficient liquidity? Which country in the world can produce such a big gap between the rich and the poor in such a short time, isn't it caused by liquidity?

Objectively speaking, the liquidity has been continuously improved since the reform for more than 20 years. Originally, farmers were not allowed to enter the city, and now nearly 300 million farmers are working in the city; In the past, only senior officials could go abroad, but now farmers can also go abroad; Originally, foreign trade was a state monopoly, but now private foreign trade companies have mushroomed; It turns out that cadres are the screws on the revolutionary machine, and now it is the choice of both sides to find a job; In the past, gold and foreign exchange could not be traded freely, but now there are fewer and fewer restrictions. So the mobility is increasing, but the gap between the rich and the poor is widening. It can be seen that there are fundamental defects in explaining the widening income gap with insufficient liquidity. On the contrary, it is the increase of liquidity that leads to the widening income gap in China. If there is no increase in mobility since the reform and opening up, everyone sticks to their own land and all the opportunities to get rich cannot be used, then China will still be a poor country.

The difference between urban and rural areas is the root cause of uneven distribution.

From the perspective of rural areas and cities themselves, the income gap is not that big: the Gini coefficient of income distribution in rural areas is only 0.36, while that in cities is only 0.32. But combining urban and rural areas, the Gini coefficient reaches 0.45.

Is the unfair income distribution caused by the unequal starting point? If we take the state during the "Cultural Revolution" as the starting point, except for the differences between urban and rural areas, other artificial inequalities have been eliminated as far as possible. During the Cultural Revolution, China's property inequality was probably the smallest in the world, because there were no rich people at that time, and everyone was equally poor. In terms of education, most universities have been closed, leaving only a few universities of science and engineering. Admission opportunities should take care of the disadvantaged groups as much as possible and give them more opportunities to enter universities. Most opportunities for social promotion are also reserved for people from three generations of poor peasants. The initiator of the "Cultural Revolution" not only wiped out the rich, but also knocked down the learned and thoughtful people, saying that they were reactionary academic authorities. The "Cultural Revolution" deprived people with administrative ability and leadership ability, saying that they were in power following the capitalist road. Finally, the rebel leaders who appeared in the movement were arrested. In short, the "Cultural Revolution" knocked down all the social elites. Although there were still many inequalities at that time, it should be regarded as a fairly equal society compared with other societies. Therefore, apart from the urban-rural differences, other inequalities should be said to be very small.

Now let's look at the difference between cities and rural areas. Scholars who study income distribution have also reached the same result, that is, as far as rural areas and cities are concerned, the income gap is not that big: the Gini coefficient of income distribution in rural areas is only 0.36, while that in cities is only 0.32. But combining urban and rural areas, the Gini coefficient reaches 0.45. Therefore, the fundamental reason for the uneven income distribution in China is the great difference between urban and rural areas.

This difference has existed since the founding of the People's Republic of China, and then it has been strengthened. By the late Cultural Revolution, the difference between urban and rural areas had developed into a typical dual structure. Rural people are not allowed to enter the city. Their dream is to have a city hukou. What students want most is to have an indicator of returning to the city when they decentralize the countryside. After the reform and opening up, the difference in economic income between urban and rural areas has not fundamentally changed, but may have expanded. Great progress has been made in the construction of large and medium-sized cities such as Beijing and Shanghai. However, the changes in the rural landscape are limited, except for some new houses, which are basically the same. So some people say that China's cities are like Europe and its countryside is like Africa. Since the reform and opening up, although the proportion of rural population has dropped from more than 80% to 60%. However, since the late 1980s, the income growth of rural population has always been lower than that of cities, and the gap is getting bigger and bigger. This is the basic reason for China's high Gini coefficient.

Industrialization will inevitably lead to polarization between the rich and the poor.

The experience of China in the past 20 years is a process of rapid industrialization. Moreover, due to the huge population base of China, the situation in different regions of China is significantly different. Once the mobility increases, those who have the opportunity to get rich will soon get rich, while those who stay in the countryside will continue to live in poverty.

From a global perspective, poor countries are agricultural countries, while rich countries are industrial countries or countries with dominant service industries. It can be seen that the root of the gap between the rich and the poor is in the order of industrialization. As long as we embark on the road of industrialization, some people will get rich first, and the latecomers will not catch up, forming a gap between the rich and the poor. China is in the process of industrialization, and the income of those who have the opportunity to leave agriculture first will increase, while the income of those who stay in the countryside depends on agriculture, which is hard to get. This may be the main reason for the widening gap between the rich and the poor in China.

We look at the world history of the past 200 years, which is also very clear. World industrialization began in the late18th century. Thousands of years before that, the progress of human society was very slow. The population has not increased much, and the average life expectancy has not increased much. It is industrialization that has changed the development path of human society. The population is increasing rapidly, life expectancy is greatly prolonged, and wealth is accumulating rapidly. Madison, Peking University Press, 2003). The countries that first embarked on the road of industrialization gradually became rich, and after the completion of industrialization, the gap between the rich and the poor in society was not very large. When more countries are still in the process of industrialization, domestic income distribution will tend to expand. This is also the characteristic of Kuznets' inverted U-shaped income distribution, which deteriorates first and then improves. His original words are: "The long-term trend of income distribution inequality can be assumed as: rapid expansion in the initial stage of economic growth from pre-industrial civilization to industrial civilization, then temporary stability, and then gradual contraction in the later stage of growth."

The experience of China in the past 20 years is a process of rapid industrialization. Moreover, due to the huge population base of China, the situation in different regions of China is significantly different. Once the mobility increases, those who have the opportunity to get rich will soon get rich, while those who stay in the countryside will continue to live in poverty. This is probably the basic reason for the widening gap between the rich and the poor in China. In other words, the widening income distribution gap in China is mainly caused by the industrialization process, which is an inevitable process in development. Improper policy is not the main reason. This is why many historians have found that social unrest is most likely to occur when the per capita income is 3,000-5,000 dollars. After the start of industrialization, the per capita income increased, but the gap between the rich and the poor widened and social instability increased.

Of course, the issue of income distribution is a very complicated one. It is inevitable to oversimplify the process of industrialization, and there are exceptions. For example, India is also in the process of industrialization, but the income gap is smaller than ours. I think this is because they are not opening up as fast as we are, and the changes are not as drastic as we are. Social differentiation has a long history, and its mobility is worse than ours. India's foreign investment is only our110, and the proportion of savings in GDP is only half of ours. These two important factors of active economy are far weaker than ours, and their industrialization process is far slower than ours.